Neo-broker Robinhood is once again cutting its workforce

The trading platform suffered from investor hesitation. This is his second round of layoffs this year.

The US online brokerage platform Robinhood is to lay off 23% of its staff, or more than 750 people, as interest in the stock market and cryptocurrencies has largely declined from the boom seen during pandemic. “Last year, we recruited the hypothesis that the appetite for the stock market and cryptos observed during the Covid period will continue in 2022explained boss Vlad Tenev in a letter to employees posted on the company’s blog.

The California company already laid off about 9% of its workforce by the end of April, after seeing the number of active users fall by 8% between the third and fourth quarter of 2021. It also indicated that it will focus on cost control. “It is not enough“, said Vlad Tenev in his letter addressed to “robin hoodies” (they “Robinhoodians», pun between Robin Hood and «hoodiewhich means hoodie). “Since then, we have seen the macroeconomic environment deteriorate further, with inflation at a 40-year high, accompanied by a crash in the crypto market.“, he details. “This further reduces our customer base and assets under our control.»

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The platform, which went public a year ago, retained around 2,600 employees, after laying off around 1,100 people in all. This second wave of layoffs will concern all trades, but mainly operations and sales, said the boss. According to the quarterly earnings release on Tuesday, the service had about 15 million monthly active users at the end of June, 28% less than last year. Its turnover decreased by 44% within a year. Faced with the cryptocurrency crisis, many investment platforms specializing in volatile currencies have recently declared bankruptcy.

And, generally speaking, many technology companies are slowing down the pace of hiring or laying off staff, facing the unfavorable economic context. Shopify, an online sales platform, announced last week that it was laying off 10% of its employees, or about 1,000 people, because the mass adoption of e-commerce during the lockdowns did not translate into many change. .

A $30 million fine

Although short, Robinhood’s history has been marked by many controversies. The founders reiterated that they wanted itdemocratize access to finance“, but their economic model is worried, because the platform finances the loss of commissions by subcontracting a large number of orders to intermediaries who pay them. A legal practice, but unclear and possible source of conflict of interest. On Monday, a New York financial services regulator fined the cryptocurrency business $30 million for violating money laundering and cybersecurity laws.

We have made significant progress in implementing cybersecurity and legal compliance programs, and we will continue to prioritize this work for the benefit of our customers.Cheryl Crumpton, a Robinhood lawyer, responded when contacted by AFP.We remain proud to provide an easier and cheaper platform to buy and sell crypto“, he added.

Robinhood rose to global prominence in January 2021, during the GameStop saga, which saw thousands of small shareholders drive the stock of this chain of video game stores from 17 to almost $500 in a few days. Unable to manage the flow of orders, Robinhood had to block some transactions, at the risk of imploding itself, provoking the anger of many stockbrokers. The company’s stock has lost half its value since the start of the year.

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